Legislative Positions 2015
Rural Business Incentives
During the 2011 Kansas Legislative session, legislation was passed that created the Rural Opportunity Zone (ROZ) program. As amended, the program provides financial incentives for people that move to certain rural counties in Kansas. At the time the ROZ legislation was passed, several programs that provided business expansion incentives for rural counties were discontinued. Thus, a program that was created to grow the rural population was enacted while programs designed to provide for business and economic growth, which naturally create population growth, were discarded. In addition, job creation programs such as HPIP and PEAK have been restructured making them more difficult to use in communities of all sizes. These changes coupled together have effectively taken all usable incentives for economic growth out of the Kansas toolbox.
Rural counties need the ability to incent job creation and expansion so rural businesses are not incentivized to move to urban areas or out of state to take advantage of expansion incentives.
Rural jobs historically lag urban jobs in technical skill and wages and rural companies add jobs one or two at a time rather than the large expansions often found in urban areas. Historically the rural provisions of state sponsored incentive programs included provisions in rural counties that made exceptions for lower wage rates and provided incentives for retail business investment and job creation. Rural communities, whether they are or are not designated as ROZ communities, have lost the competitive edge necessary to incentivize industrial manufacturing, agriculture, healthcare and retail ventures in their counties.
Re-authorize the project sales tax exemption for all communities in Kansas with guidelines that previously existed within the Kansas Enterprise Zone program. This would allow business ventures, with the exception of retail ventures, to participate in the project sales tax exemption incentive. Retail businesses locating or expanding in cities with a population of 2,500 or less or unincorporated areas of counties with a population of 10,000 or less would qualify for the project sales tax exemption.
Because these sales tax collections are unrealized if the projects are not built, this is a revenue neutral proposal. The project sales tax exemption on construction materials will incent re-investment in downtown properties as well. Economic Development practitioners from all sizes of counties can provide multiple examples of how this incentive worked to create additional opportunities within their communities when it was available.
Lack of available, affordable, and quality housing for middle income families continues to be a hindrance to development and population growth in many of our western Kansas counties. In response to the increased need for moderate income housing, the Kansas Legislature passed House Sub for SB 294 in 2012. The bill provided $2 Million to the State Housing Trust Fund (SHTF) for the purpose of administering and supporting housing programs, resulting in the Kansas Housing Resource Corporation’s (KHRC) Moderate Income Housing (MIH) Program and was also funded at $2 Million for 2014.
Since 2012, the MIH program has received $20.3 million in requests and have awarded over $6 million with an average leverage factor of 7.6:1. Of the 23 counties receiving funds, 14 are part of the wKREDA region resulting in $4.4 million in awards and leveraging roughly $30 million of housing investment in the region. There is a demonstrated need for this program across the state and certainly within the wKREDA territory. WKREDA communities anticipate growth and housing is a necessary component for said growth.
Moderate income housing is vital for economic development, yet difficult to achieve given that most federal housing programs serve a lower income bracket, and market supply is limited due to high development costs, low appraisals, tight lending conditions and lack of investor interest. Industries and retail businesses looking to expand continue to state that the biggest obstacle to hiring is the lack of housing.
Continue to appropriate funding for housing programs, such as the Moderate Income Housing Program as it has a proven track record to work in our communities.
Support for Network Kansas
The Kansas Center for Entrepreneurship DBA NetWork Kansas supports the economic needs of entrepreneurs throughout the wKREDA region. One of the mechanisms utilized by Network Kansas to support these efforts is the Kansas Entrepreneurship Tax Credit which is utilized to raise money for program support and two funding partnerships: StartUp Kansas and the Entrepreneurship (E-) Community Partnership. StartUp Kansas and E-Communities provide matching loans for startups and expansions of existing businesses in rural communities across Kansas. NetWork Kansas also administers the Kansas Capital Multiplier Programs that have also provided additional matching loan funds to businesses in the wKREDA region.
wKREDA Region Impact
- Provided more than $6.1 million in matching funds to 157 businesses which created and/or retained 1,300+ jobs
- Seventy-five percent (75%) of the funded businesses have come in communities of 5,000 or less with startups comprising 42% of the businesses funded
- Leveraged more than $68 million in additional capital
- Eighteen (18) wKREDA communities have achieved E-Community standing creating an additional $1.2 million in loan funds to support projects and leverage other business financing options
The changes in the state income tax structure have reduced the need for some donors to utilize tax credits like the Kansas Entrepreneurship Tax Credit. This shift has the effect of reducing the overall donor base which affects the ability to raise funds for these loan programs and partnerships. However, even with the reduction of the potential pool of donors, a significant portion of the credits are being utilized which have proven vital to communities and businesses across the wKREDA region.
Continue to support NetWork Kansas and the Kansas Entrepreneurship Tax Credit program until alternative funding sources and/or revenue streams can be identified or developed to offset the decreased effectiveness of the tax credits should that occur.
KDOT Funding WKREDA members represent a large geographic area of the State of Kansas. The long-standing commitment to quality State highway systems has served Kansas well and has allowed many rural communities to grow by connecting them efficiently with the surrounding area. We are supportive of the sustenance of KDOT funding to ensure that Kansas continues to offer an outstanding transportation network. Without that transportation network, economic development efforts would be hampered significantly.